German carmaker Volkswagen (VW) will suspend production of its Golf model as of next Wednesday due to chip supply issues, daily Bild reported on Wednesday.
VW had said on Tuesday that it was temporarily halting some production but denied any connection with a Dutch-Chinese stand-off over chipmaker Nexperia putting pressure on supply chains.
Earlier on Wednesday, the company warned staff of the risk of short-term manufacturing disruptions because of the Nexperia dispute.
A company spokesperson told Reuters that VW had issued an internal letter to staff saying production had not yet been impacted by chip shortages, but "in view of the dynamic situation, however, we cannot rule out an impact on production in the short term."
The dispute over Nexperia spurred fears in the automotive industry, particularly in Europe.
It came as the Dutch government earlier this month decided, in a surprise and rare move, to seize the Chinese-owned semiconductor company, citing "risk to Dutch and European economic security" and "acute signals of serious governance shortcomings and actions within Nexperia."
Nexperia is a manufacturer headquartered in Nijmegen, the Netherlands. It is a subsidiary of Wingtech Technology, a Shanghai-listed company partially owned by the Chinese government.
VW said on Tuesday it was preparing to pause production of two key models as planned, but said those halts were not connected with the standoff over Nexperia.
Bild also cited unspecified sources as saying Volkswagen has started discussions with labor authorities about the option of launching a state-backed reduced working hours scheme, potentially affecting tens of thousands of employees.
VW declined to comment on that.
German carmakers' association VDA warned on Tuesday that the China-Netherlands dispute could significantly disrupt automotive production in the near future. Despite talks between the Dutch and Chinese ministers on Tuesday, no solution to the Nexperia impasse was reached.
Last week, the European Automobile Manufacturers’ Association (ACEA) said it was deeply concerned by potential significant disruption to European vehicle manufacturing if the interruption of Nexperia chip supplies cannot be immediately resolved.
"Without these chips, European automotive suppliers cannot build the parts and components needed to supply vehicle manufacturers and this therefore threatens production stoppages," it warned.
Mercedes-Benz said on Tuesday it is closely monitoring developments related to Nexperia, suggesting it has secured supplies for the short term.
China's Commerce Minister Wang Wentao, on the other hand, urged the Dutch government to resolve a deepening row "as soon as possible," accusing it of damaging the global semiconductor supply chain.
"China urges the Dutch side to move from the general standpoint of protecting the security and stability of the global supply chain (and)... properly resolve the issue as soon as possible," Wang said, according to a ministry statement.
The dispute could cause further strain on Europe's automotive sector, whose carmakers and suppliers are already battling tariffs, foreign competition and weak demand.
